Two Way Traffic Ahead

I am very excited to be the Legislator-elect, soon to represent Westchester County’s 10th District, covering Eastchester, Tuckahoe, and a large portion of New Rochelle. Although I can’t vote on the 2018 County budget proposed by outgoing County Executive Rob Astorino, I have gotten very involved in the budget process. I’ve been reviewing the proposed operating and capital budgets in great detail and have spent a lot of time in meetings and discussions with the current Democratic Legislators and Legislators-elect. We think there are many problems in the proposed budget, some of which are a continuation of the financial shenanigans I wrote about back in my July review of the 2016 County financial report https://electdamonmaher.com/doing-the-math/.

The budget must be passed with amendments, if any, by December 27th. The Board of Legislators has been considering public input, including speakers at three well-attended public hearings, in making changes to the original proposal. Based on my review of the budget and ideas from the public and private meetings, here are some concerns and some suggestions that I have heard for raising revenues and cutting expenses. I liked my running mate and County Executive-elect George Latimer’s use of the phrase “Participatory Democracy” at a recent meeting of the Transition Team, a dialog between the electorate and the elected, and would like to use this model for my time in public office. So I’d like to make this a two-way street, and ask for your feedback on these ideas or others you may have thought about.

First, a recap of the supposedly “balanced” budget for the current calendar year of 2017. Since the original Airport deal cooked up by CE Astorino did not happen, the $15 Million revenue from it that was included in the 2017 budget didn’t materialize. Instead, there is a deficit which in effect eats away at the fund balance (in effect, our “rainy day” or “savings” account), reducing it below the generally accepted benchmark minimum of 8% of annual budget expected by the bond rating agencies.

So, what does Astorino’s proposed 2018 budget do? (The proposed budget and more information can be found at http://westchesterlegislators.com/fy2017-budget-dashboard.html.) It claims to be a balanced budget with no tax increase, but it is not. It literally doubles down on still nonexistent airport revenue, plugging a now nominal $30 Million budget gap with anticipated funds from the Airport deal which, to say the least, is not at all certain to go forward. And the budget still doesn’t take into account increased expenses from contract settlements needed with union employees who have worked without contracts for years. Settlements will call for current and retroactive increases going back as much as 6 or 7 years that haven’t been reserved or planned for in all that time. This item could increase the budget gap to $50 Million, and possibly much more.

The proposed budget projects $20 Million more in sales tax revenue over 2017, about a 4% increase, apparently based on continued high, and higher, gasoline price. Gas prices go up and down, and this is certainly not a long-term strategy as energy prices in general are down and we enter the era of ever more efficient vehicles. Adding it all up, arguably the “real” budget gap is not zero and not $30M but some figure over $50M and very possibly closer to or over $100M depending on the outcome of negotiations with the unions.

The proposed budget also cuts staff, including cutting the incoming County Executive’s staff (!), engineers necessary to complete planning and execution of necessary capital improvements, and all park curators, while adding a whole bunch of patronage jobs in the County Board of Elections, half of which must go to Republicans. But the people have spoken, and it now seems likely that a strong public outcry has forced a restoration of many if not most of these positions in the ongoing budget negotiations.

WHAT CAN WE DO?

As David McKay Wilson says in the Journal News and online at lohud.com [http://www.lohud.com/story/money/personal-finance/taxes/david-mckay-wilson/2017/11/30/tax-watch-astorino-county-taxes-latimer/906055001/], closing the budget gap could be covered with a 13% increase in the property tax levy, which few would have the appetite for. And what about the state-mandated tax cap? Well, the tax cap does not max out at 2% as most people think. Rather for the County, due to the years of the “frozen” tax levy and certain carryover provisions, the tax cap is actually in the 4.2 to 5.5% range. That being said, it seems unlikely that a super-majority of the current Board of Legislators (needed to override the likely Astorino veto of any tax increase) would go above the publicly-perceived ceiling of 2%. As of this writing, it has been reported in the local press that Legislators have agreed to a 2% tax increase needed to close the budget gap – without the airport deal although still not addressing union contracts – with enough votes to override the County Executive’s promised veto.

Even if the 2018 budget is getting close to passing, we still need ideas for the future. How about increasing the sales tax 0.5% to make up a piece of the budget gap? Of course, that’s still a tax increase, paid by everyone, rich and poor alike, not just homeowners, and is a more regressive tax. Also, sales tax increases require enactment by NY State legislators and the Governor, most of whom throughout the state are not particularly sympathetic to the plight of homeowners in one of the wealthiest suburbs in the State and who do not want to be associated with a sales tax increase in the 2018 statewide election year.

How about a new transfer tax on very high-end real estate transactions? The County already receives a small amount of income from the mortgage recording tax. NYS, NYC and Yonkers have transfer taxes on all, not just high-end properties, although NYS has an additional tax on transactions over $1 Million, whether mortgaged or “all cash,” and seeking more from that demographic may be more in line with a progressive agenda. But is it worth the potential negative effect to the local real estate market, which may already be imperiled by national Republican tax plan?

To the extent that new revenues don’t materialize, any shortfalls next year will have to be covered by dipping into the fund balance again, possibly to below 7% of total budget, which might hurt our bond rating and increase interest costs.

On the expense side, even the ideological Republicans have found next to nothing left to cut. The outgoing incumbents have mentioned every year it would be a good idea to push for energy-efficiency lighting and placing solar panel and wind turbines on County property but haven’t done so; now is the time to actually follow through on such plans. They’ve boasted about drastically reducing personnel levels, but not about reducing leased space as far as I can tell; leases and contracts should be compared with current space needs and terminated as soon as possible. And, as we keep saying, invest wisely now in people https://electdamonmaher.com/lets-invest-in-our-children/ and infrastructure http://www.lohud.com/story/news/investigations/2017/07/06/westchester-capital-backlog/101255132/ to save the costs that result in waiting too long to do so.

I look forward to hearing your creative solutions that I can share with my soon-to-be fellow legislators now, and work on implementing when I take office in January. My email is dmaher@levydavis.com. I promise to carefully consider all your recommendations, and I hope you will forgive me if I’m too pressed for time to reply right away.

1 Comment

As always, thoughtful and intelligent. Thank you for laying it out so thoroughly so we can see through the chaos of Astorino’s terrible budgeting over the last 8 years. Again, I think it is worth mentioning that the county tax is a fairly small portion (15%) of our total tax bill.